Legislation (H.R. 3866) was introduced on September 28 to amend the Federal Credit Union Act by excluding extensions of credit made to veterans from the definition of a member business loan.
This bill would exclude these loans from the aggregate member business loan cap of 12.25 percent of assets.
The legislation was introduced by Rep. Vicente Gonzalez (D-TX) and cosponsored by Rep. Paul Cook (R-CA).
However, this bill represents a fundamental departure from other extensions of credit that are excluded from the definition of a member business loan (MBL).
The extensions of credit that are currently excluded from the definition of a MBL pose minimal risk to the National Credit Union Share Insurance Fund, as these loans are fully secured by shares or 1-to-4 primary residence, are fully insured or guaranteed by a governmental agency, or are less than or equal to $50,000.
Read the bill.
This would be a material exception.
ReplyDeleteMany if not most of the nation's largest credit unions are military based and have also added the public communities adjacent their bases via community charters. They already have the scale and the reach to do business banking in volume with both vets and non-vets. This change would allow a much greater volume of risk to a system that has no risk-based capital requirement for individual credit unions.
Instead, all cus of all sizes must share the risks of all others through their mandatory deposits to their federal deposit insurance fund. The NCUA is presently increasing this fund's deposit requirement for all credit unions.
It's many, it's not most.
DeleteThat said, you're right and NCUA is increasing to 2% as they will not stop at 1:39.
They're just not being transparent about it, nor are nafcu and CUNA. We are planning on 2% and assessments to get there and for taxis.